After decades of bitter relations, Boeing and the machinists’ union vowed a new era of cooperation on Wednesday as they announced a far-reaching four-year contract extension that would raise wages, improve pensions and add thousands of new assembly jobs in Washington State to build an updated version of its 737 jet.

Union officials said that the deal resolved their disputes with Boeing and that they would ask the National Labor Relations Board to drop a politically charged case against Boeing over a new plant it opened this year in South Carolina. The agency, which filed the case in April in response to a complaint by the machinists’ union, is asserting that the company’s decision to build the $750 million plant in South Carolina constituted illegal retaliation against machinists in Washington for exercising their right to strike.

The labor board’s move against Boeing — in which it seeks to have the company to move the production line to Washington State — has been fiercely denounced by South Carolina officials and Republican presidential candidates, who have said the N.L.R.B. should not be telling companies where they can build new plants.

Boeing and the union said the settlement, announced 10 months before their existing contract expires, represented a new day between the often-feuding sides. Officials of the International Association of Machinists and Aerospace Workers expressed relief and delight that Boeing had decided to build a new aircraft in the Puget Sound area. The union had feared that Boeing would decide to build that aircraft in a southern state where unions are weak, just as Boeing did when it decided to build the new plant for its 787 Dreamliner in South Carolina.

The company and union announced Wednesday that Boeing would build its 737 Max, a more fuel-efficient version of its workhorse passenger jet, in Renton, Wash., near Seattle. Boeing currently builds 35 planes of the older 737 model each month in Renton. It plans to increase that to 42 per month, and perhaps more if it can achieve productivity improvements through incentive bonuses that are laid out in the new contract.

Industry analysts said the agreement was reached now because demand for new planes had soared and both the company and the union had a strong interest in making sure that production was not disrupted, a prospect that could send sales to Boeing’s rival, Airbus.

Officials with the machinists’ union said that they were pleased with the new contract and would urge the N.L.R.B. to drop its case against Boeing once union members ratified the contract.

“If this agreement is ratified, we will engage the government in discussion and inform them that our issues with the Boeing Company are behind us,” said Tom Wroblewski, president of Machinists Union District Lodge 751, which represents 28,000 Boeing workers in the Puget Sound area.

Lafe E. Solomon, the labor board’s acting general counsel, who brought the case against Boeing, called Wednesday’s agreement “a very significant and hopeful development.” He added that if it was ratified, “we will be in discussions with the parties about the next steps in the process.”

While it’s up to the labor board whether to drop the case, the union’s newfound embrace of Boeing could heavily influence the board’s course.

An error has occurred. Please try again later.

You are already subscribed to this email.

Industry analysts said the proposed contract was unusually generous and aimed to put a definitive end to a fractious era during which the machinists went on strike five times since 1977, including a 58-day strike in 2008 that cost Boeing $1.8 billion. With its huge order backlog, its plans to ramp up production and fierce competition from Airbus, Boeing seemed eager to solidify a new contract that would ensure years of labor peace — especially when some customers had threatened to give orders to Airbus if there were more strikes.

Under the tentative agreement, the workers would receive annual wage increases of 2 percent, cost-of-living adjustments, a productivity incentive program intended to pay bonuses of 2 to 4 percent and a ratification bonus of $5,000 for each member.

Workers will pay more for their health insurance, but at a time when many companies are pushing to replace traditional pensions with less costly 401(k) plans, Boeing agreed to a more generous pension formula and to guarantee that new hires would continue to receive traditional pensions.

Mr. Wroblewski said an especially important aspect of the agreement was its job security provisions, which he called “precedent setting.” He said the contract would “secure thousands of jobs while raising machinists’ pay and pensions.”

“Hopefully it also signals the start of a new relationship that can both meet our members’ expectations for good jobs, while giving Boeing the stability and productivity it needs to succeed,” he said.

James F. Albaugh, president and chief executive of Boeing Commercial Airplanes, voiced similar optimism.

“If our employees ratify a new agreement, building the 737 Max in Renton will secure a long and prosperous future there, as well as at other sites in the Puget Sound area and in Portland, Ore., where 737 parts are built,” he said.

Several other states, including Texas and South Carolina, had vied to win the 737 Max production.

Scott Hamilton, managing director of the Leeham Company, an aviation consulting firm in Issaquah, Wash., said the new agreement was good for virtually everyone. “Boeing wins in that it has four more years of production stability,” he said. “It doesn’t have the pain and agony of a potential strike. It also wins in that it certainly appears that the N.L.R.B. case will go away.”

“The union wins in that it will have the new 737 Max in Renton and job security,” Mr. Hamilton added. “Boeing’s customers win because they don’t have the potential of a strike disruption. I don’t see any loser, other than the other states that were salivating to build the Max.”

A version of this article appears in print on December 1, 2011, on Page B1 of the New York edition with the headline: Machinists And Boeing Reach Deal. Order Reprints|Today's Paper|Subscribe